Josh Smith has compiled some of his personal financial data in
order to determine his liquidity position. The data are as follows:
Account
|
Amount
|
Cash
|
$3,120
|
Marketable
securities
|
910
|
Checking
account
|
790
|
Credit
card payables
|
1,180
|
Short-term
notes payable
|
810
|
a. Calculate Josh's liquidity ratio.
b.
Several of Josh's friends have told him that they have
liquidity ratios of about
1.91.9.
How would you analyze Josh's liquidity relative to his friends?
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